Egypt Appoints New Premier Amid Rifts Over Mursi Removal

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A injured man is wheeled into a make shift hospital where victims are being brought following clashes between Egyptian police and Muslim Brotherhood supporters of deposed Islamist president Mohamed Morsi outside the elite Republican Guards base in Cairo early on July 8, 2013. Close

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Photographer: Mahmoud Khaled/AFP/Getty Images

A injured man is wheeled into a make shift hospital where victims are being brought following clashes between Egyptian police and Muslim Brotherhood supporters of deposed Islamist president Mohamed Morsi outside the elite Republican Guards base in Cairo early on July 8, 2013.

Egypt’s interim premier will begin talks on forming a cabinet that will have to heal political rifts and revive a crumbling economy if it’s to end the crisis that engulfed the nation following the ouster of Mohamed Mursi.

The appointment as prime minister yesterday of Hazem El-Beblawi, who headed the finance ministry during part of the transitional period after the 2011 removal of Hosni Mubarak, will bolster President Adly Mansour as he confronts growing violence since Mursi’s removal, upheaval that culminated in the killing on July 8 of dozens of the Islamist’s supporters by the army. Nobel Laureate and anti-Mursi leader Mohamed ElBaradei was named vice president for foreign relations.

El-Beblawi takes ownership of an economy stuck in the worst slowdown in two decades, record unemployment and foreign reserves that are more than 50 percent below their December 2010 levels. Cabinet negotiations will last a “few days,” he said in an interview yesterday. The premier will offer the political arm of the Muslim Brotherhood, from which Mursi hails, places in his ministerial team, presidential adviser Ahmed El-Meslemani told satellite channel CBC in an interview.

The Brotherhood branded Mursi’s removal an army coup and has vowed to continue protests until it’s reversed. His opponents say he betrayed the goals of the 2011 revolt, focusing on tightening the Islamists’ grip on power instead of working to improve the lot of many Egyptians.

Photographer: Spencer Platt/Getty Images

Pro-Mohamed Morsi supporters attend a rally near where over 50 were purported to have been killed by members of the Egyptian military and police in early morning clashes in Cairo on July 8, 2013. Close

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Photographer: Spencer Platt/Getty Images

Pro-Mohamed Morsi supporters attend a rally near where over 50 were purported to have been killed by members of the Egyptian military and police in early morning clashes in Cairo on July 8, 2013.

Largest Group

While “it’s essential that the Brotherhood be brought back into the political process, that becomes much more difficult after the violence,” Shadi Hamid, director of research at the Brookings Doha Center, said by phone. “You cannot have the largest political grouping in the country outside the system and expect the system to be stable.”

In an interview with the English-language Daily News Egypt newspaper June 29, El-Beblawi said spending on subsidies was unsustainable for a struggling economy and “exceeded reasonable limits.” In addressing the burden, Egyptians “must accept some of the consequences,” he was cited as saying.

“Egypt is going through a very difficult economic downturn and the expertise of Hazem El-Beblawi as a former finance minister may come in handy,” said Yasser el-Shimy, an analyst in Cairo at the International Crisis Group. On the other hand, opting for El-Beblawi and ElBaradei may “reinforce the narrative common among Islamists that the military and others just simply couldn’t tolerate having” them at the helm.

Political Wrangling

The appointments ended days of political wrangling in which the only Islamist party to support the military’s decision to remove Mursi vetoed an ElBaradei nomination for the premiership, saying it would have widened political divisions.

The Nour Party has no objections to El-Beblawi, Bassam Al Zarqa, its deputy leader, said by phone yesterday. “El-Beblawi is a technocrat, economist and a non-political figure who’s able to move forward the process of national reconciliation,” he said. The party was still discussing its position on ElBaradei’s appointment on which it was not consulted, he said.

El-Beblawi’s appointment “is part of the transition,” said U.S. State Department spokeswoman Jennifer Psaki. “We have conveyed to all of Egypt’s leaders, we want to see an inclusive government that addresses Egypt’s many political, economic and social challenges.”

Election Timeline

Mansour on June 8 laid out a timeline for amending the constitution and holding legislative and parliamentary elections. The U.S. is “encouraged” by the steps, Psaki said.

The plan and yesterday’s progress in forming an administration may help cement the new leadership in the face of pledges by Mursi supporters to resist his exit.

Buoyed by the news, the yield on the government’s 5.75 percent bonds due in April 2020 pared gains. Stocks rebounded from the biggest decline in almost a month.

While the rocky transition from Mursi’s rule lurched forward, Egypt received some relief in the form of two aid announcements. The United Arab Emirates said it will provide $3 billion, while Saudi Arabia put up $5 billion, including a $2 billion deposit with the central bank, the official Saudi Press Agency said yesterday, citing Finance Minister Ibrahim al-Assaf.

Rival Rallies

The ouster of Mursi, who last year became Egypt’s first democratically elected civilian president, sparked days of rival rallies in the capital and nationwide.

What led to the deaths of at least 54 people outside a Republican Guard building is disputed. The military said it was responding to an armed attack, while the Muslim Brotherhood movement from which Mursi hails said the assault was unprovoked.

“Egyptian authorities must end the military and police’s use of grossly disproportionate force,” Hassiba Hadj Sahraoui, a deputy director at Amnesty International, said on the group’s website.

The violence jeopardized the political transition, with the Nour party saying it was suspending talks over the formation of a government in protest.

Psaki refused to condemn the military for the killings, saying the situation wasn’t clear and investigation was required. President Barack Obama’s administration has condemned the Brotherhood for “explicitly” calling for violence.

Obama discussed the situation in calls yesterday with Persian Gulf leaders, the White House said in a statement. In the conversations with Crown Prince Mohammed bin Zayed Al Nahyan of the U.A.E. and Emir Tamim bin Hamad Al Thani of Qatar, the leaders shared their concern over the level violence in Egypt and agreed that the political transition must be inclusive, the White House said.

Declaration Criticized

The 33-article constitutional declaration gave a timeline rather than specific target dates. Parliamentary elections will be called within 15 days of the results of a referendum on proposed amendments to the suspended 2012 Islamist-backed charter, whose ratification outraged Mursi opponents.

The actual vote will take place one to two months later, according to a copy of the declaration e-mailed by the presidency. A presidential vote would be called within the week after parliament convenes.

The declaration soon ran into opposition. Nour’s Al Zarqa criticized it for giving the president too much power. The plan was also attacked by Essam el-Erian, vice chairman of the Brotherhood’s Freedom and Justice Party.

“Egypt will not surrender,” he wrote on Facebook. “Things have become clear. The target is not just the president, but the identity of the nation and rights and freedoms of the people.”

The Tamarod movement, a youth group that served as a catalyst for the protests that ousted Mursi, said they rejected the framework as it “lays the foundation for dictatorship.”

The declaration grants the president “absolute and unrestricted power,” Islam Hammam, a member of Tamarod’s central committee, said by phone. Members of the movement were meeting with the interim president yesterday to submit a list of amendments, he said.

To contact the reporters on this story: Mariam Fam in Cairo at mfam1@bloomberg.net; Salma El Wardany in Cairo at selwardany@bloomberg.net; Tarek El-Tablawy in Cairo at teltablawy@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net

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